CHICAGO, April 14, 2017 – Good news for those playing “Beat the Clock” in getting their taxes filed. Instead of the usual April 15th deadline, this year it has been extended to midnight on Tuesday, April 18.
And if you still haven’t completed your return, the Illinois CPA Society has a few key guidance points to keep in mind for last-minute tax preparations.
Know your deductions
The standard IRS deductions for 2016 tax filings, which can be claimed in lieu of claiming actual itemized deductions, are:
- $6,300 for those single or married and filing separately
- $9,300 if filing as Head of Household
- $12,600 for married taxpayers filing jointly and for qualifying widow or widower
In the rush to get tax returns filed before deadline, it’s easy to overlook deductions that may help you earn a refund check from the Internal Revenue Service (IRS). Qualifying taxpayers may be entitled to additional deductions on top of their standard deductions, including:
- Home-office deduction – For taxpayers who are self-employed or work from a home office, the home-office deduction may be available. The simplified method is calculated by deducting $5 for every square foot of work space used—up to a maximum of 300 square feet. So the maximum deduction would be $1,500. It must be a dedicated office space and not a room used for other purposes, such as a kitchen.
- Health insurance premium deductions for self-employed – Business owners and self-employed taxpayers may deduct health insurance premiums, as long as they aren't already covered under their employer's or spouse's employer's plan.
- Health savings account (HSA) deduction - For 2016 tax filings, the maximum, pre-tax payroll individual contribution limit is $3,350. The maximum contribution for family policies is $6,750. HSA Contributions can still be made by April 18.
IRA contribution option
Looking to make a long-term investment that also offers a short-term tax break? Contributing to an individual retirement account (IRA) by the filing deadline might be a solid option.
For 2016 tax filings, the maximum contribution amount for traditional and Roth IRAs is:
- $6,500 for those age 50 and older.
IRA contribution limits do not include rollover contributions or qualified reservist payments. Contributions to IRAs for current tax filings can be made right up to tax deadline day – April 18.
Filing extensions, penalties
Accounting professionals can help last minute filers with Form 4868 for a six month filing extension. No reason for a filing extension is necessary but, an extension is only for added time to file paperwork and does not buy you more time to pay. Tax payments owed to the government still must be made before this year’s April 18 deadline.
Paying tax after April 18, even with a timely extension, may result in added interest and penalties. Late payment penalties are 0.5% per month for every month payments are late and some minimum penalties also apply.
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About the Illinois CPA Society
The Illinois CPA Society, with more than 24,000 members, is one of the largest state CPA societies in the nation. Our mission is dedicated to enhancing the value of the CPA profession through the strategic initiatives of advocacy, information, education and connections.